Vol.5 Week 29; EATURE ARTICLES
by Rikke Netterstrom  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

Here in Malaysia, many companies seem to equate CSR with philanthropy or community donations.

The one question I am asked at every talk I give, and every training session I conduct, is “what is the difference between Corporate Responsibility (CR) and Corporate Social Responsibility (CSR)”. There seem to be a notion that there is somehow a philosophical divide between the two – with CR being the more “strategic” of the two.

My plain response is always that as far as I’m concerned there should be no difference. CSR/CR is about running a responsible business; taking responsibility for the potential adverse impacts of your business and attempting to enhance the positive aspects.

 

A responsible business should minimize its environmental impacts and create good, safe employment opportunities; it should work to ensure that communities benefit from the company’s operations, and that investors’ long-term interests are served; that its customers receive high quality services and products; and so on.

In certain industries and countries, CR/CSR is described as Corporate Citizenship, Sustainability or similar labels. I am sure that each company has a reason for using these terms. They might resonate better with the company’s’ internal stakeholders, or they might reference a certification standard or a customer requirement.

 

Ultimately, however, the practices and outcomes should be the same, regardless of the label. A responsible business is a sustainable business and vice versa. A company that acts as a good corporate citizen takes responsibility for its people, community and the natural environment in the short, medium and long term.

A dangerous obsession

I suppose that academics could argue the finer points of the use of language, but to use Paul Krugman’s controversial phrase, I think the discussion on labels is “a dangerous obsession” and can be counterproductive. It takes away from the real debate; that is, “what is good CSR?” It also leads to some very problematic outcomes.

Here in Malaysia, many companies seem to equate CSR with philanthropy or community donations. Likewise, sustainability is often linked to environmental management. This means that companies can receive CSR awards for “giving back to the community” while at the same time engaging in highly unsustainable environmental practices in their day-to-day operations.

 

In my view, awards can be extremely useful in helping raise the bar, as a means of internal leverage and a tool to promote examples of good practice. I have no problem with awards for good environmental performance or outstanding community work. But awarding blanket CSR awards to companies that do not reach at least a minimum standard across all key aspects of CSR will encourage greenwash and cherry picking.

Another issue that the label-debate raises is responsibility, governance and communications. I often come across companies that I know have excellent sustainability standards, but that fail to address these in their corporate communications and reports. This is usually because the Communications Department or Company Secretary is in charge of “CSR”, while the operational teams are responsible for “sustainability”. So a high-impact company that has invested significantly in environmental management systems and certification might fail to address this, and instead spend several pages in its annual report discussing a small project to plant trees. This can lead stakeholders to (wrongly) assume that the company is not addressing its impacts.

 

At CSR Asia, we have seen this to be the case in much of our research; both the CSR Asia Business Barometer and a survey carried out for Bursa Malaysia in 2007 arrived at this conclusion. Many companies who we know to perform well scored poorly due to a lack of relevant disclosure. Some might argue that this is unfair to companies and that focusing on disclosure is a flawed methodology.

 

However, I think that a company’s disclosure is also reflective of its governance and the extent to which CSR is embedded in company strategy. If the communications department and company secretaries do not understand what is really happening in the company they are poorly placed to communicate with key stakeholders, such as customers and investors. In all likelihood, the Board of Directors is also likely to have a similarly limited understanding of the sustainability impacts and performance of its operations.

Through almost 15 years of working in “CSR”, I have used a variety of labels, including Social Responsibility, Sustainability, Values, CSR and CR. However, the name has always seemed more a communications question than a question of substance. But my ultimate goal was always to reach a stage where such labels were no longer used. I work in the hope that one day, all companies are sustainable, responsible, and good corporate citizens, which report on their impacts on society as a matter of course; without the need for fancy names. That day is still a long way off. But in the meantime, let’s cut the semantics and get to work! ■